Millionaire Tradersreturning 6 to 8 percent a month or more, and I figured I could just
continue to do something like that. But I didn’t stop. Two weeks
later I took a trade, placed no stop-loss, and 72 hours later I had
lost 90 percent of my capital. I remember drawing it down to the
point where it was at$2,500 and saying to myself, “Maybe I can get
out at breakeven and it will be like the bad trade never happened.
Then it was down$2,000 and then it was$1,500 and by the time it
got down to that level, I just thought it can’t get any worse so I just
might as well just leave it open. And of course it would get worse.
Q: So what do you do differently now?
A: I try my hardest to not lose money. That’s my first concern.
I know this sounds heretical, but making the money isn’t the hard
part. When I first started trading, I was in a very bad spot financially.
A close friend who had been very successful in business took me
aside, looked me in the eye, and said, “Rob, you’ve convinced
yourself that making money is difficult.” Then he said, “Making
money is easy. Keeping it is difficult.” He wasn’t speaking about
trading, but he could have been and he was right.
I have found that it’s not terribly difficult to develop a profitable
trading system. What requires real grit is the ability to hold onto the
profits, to not overtrade, or increase the size of the trades beyond
what is an acceptable risk. So the name of the game for me has
been to not lose money first, and then just grind out profits week
after week as a second goal.
Q: How long did it take you to figure out that you needed to
trade defensively?
A: It was 11 months into my trading that I really started prac-
ticing this. After losing that$2,500, I spent 11 months testing
and experimenting and reading not just about trading systems or
methodologies. I tried to learn and adopt the principles that would